The aim of this paper is to
provide empirical evidence relating to the factors influencing the compliance
of Islamic finance by Indian corporate sector. The sample comprised of the
whole population of Shariah companies numbered as 190 consisted in the 500
Shariah and Nifty Shariah indices during the period of 2009 till 2014. However,
after making the necessary filtration due to unavailability of data, the actual
size of the sample came out to be 136 companies. The relationship between
factors and the extent of compliance were analysed using Panel data regression
model. The results evident that companies of larger size and higher growth rate
have significant mandatory compliance. Whereas, firm size examined with net
sales and board independence has withstood with compliance of voluntary and
overall measures. The significant implication of our results is that it
provided information on firm specific characteristics for the investors who are
looking for investment in Shariah compliant companies. In this way investor
would be able to keep an eye on their investment. These results may also be
advantageous to the regulators in making decisions. Distinct from previous
empirical research concerning to Islamic social reporting in Muslim and
non-Muslim countries, this study examines the factors affecting the extent of
Shariah compliance by the companies listed under Shariah Index in Indian stock
exchange.